Rows of automated braiding machines spin bobbins of yarn into shoelaces on the production line at the Sole Choice Inc. manufacturing facility in Portsmouth, Ohio, U.S., on Wednesday, Sept. 30, 2015.Ty Wright/Bloomberg
Orders to U.S. factories fell in August by the largest amount in eight months, led by a drop in demand for commercial airplanes and weakness in a key category that tracks business investment spending.
Factory orders declined 1.7 per cent in August after a slight gain of 0.2 per cent in July, the Commerce Department reported Friday. It was the biggest setback since orders dropped 3.7 per cent in December.
Demand in a key category that serves as a proxy for business investment slipped 0.8 per cent in August, following solid gains in June and July.
Manufacturing has been under stress this year as a strong U.S. dollar has hurt export sales. The big fall in energy prices has also led to cutbacks by energy companies.
Orders for durable goods, items expected to last at least three years, fell 2.3 per cent in August, slightly worse than the 2 per cent decline reported in a preliminary report. Demand for nondurable goods such as paper, chemicals and food dropped 1.1 per cent.
The overall weakness was fueled by a 5.9 per cent fall in demand for commercial aircraft, a volatile category that was down for the second month. Orders for machinery rose 0.8 per cent, but orders for computers and other electronic products were off 0.5 per cent.
On Thursday, the Institute for Supply Management said that its manufacturing index slid to a reading of 50.2 in September, its lowest level since May 2013.
The rising dollar makes U.S. goods more expensive in foreign markets, while weakness in China, the world's second biggest economy, is adding pressure to the global economy.
The overall economy, as measured by the gross domestic product, grew at an annual rate of 3.9 per cent in the April-June quarter, a sharp increase after an anemic 0.6 per cent rise in the first quarter. Economists are forecasting that growth in the current July-September quarter will slow slightly to around 2.5 per cent.